In Uncategorized on 04/29/2013 at 20:04

Is no excuse for Deborah E. Cole in Harry E. Cole and Deborah L. Cole, a “not for nuthin’” Section 7463, 2013 T. C. Sum Op. 34, filed 4/29/13, an example of willful blindness that would gratify the Judge Who Writes Like a Human Being, a/k/a The Great Dissenter, Judge Mark V. Holmes, although here it’s STJ Daniel A. (“Yuda”) Guy, Jr., who tells the story.

As for willful blindness, see my blogpost “Lawyers Can’t Add”, 1/17/13.

Debbie wants Section 6015(f) equitable innocent spouse treatment, “(A)lthough petitioners testified at trial that they consider themselves to be separated, they have never been divorced or legally separated, and they continued to reside in the same household at all times relevant to this case.” 2013 T. C. Sum Op. 34, at p. 3.

Harry and Debbie conceded a lot of their non-existent deductions. Their claim for casualty loss to their pre-owned Mercedes-Benz crashes when they can’t prove their basis in the vehicle, and their claim for their flooded basement founders when they testify that their lawsuit against the City of Baltimore is ongoing and they are vigorously prosecuting same, so there’s no “loss” if there’s a reasonable chance of recovery.

Debbie claims it’s all Harry’s fault.

STJ “Yuda” Guy: “…Mrs. Cole had reason to know of the understatements of tax within the meaning of section 6015(b)(1)(C). A spouse seeking relief under section 6015(b) has reason to know of the understatement ‘if a reasonably prudent taxpayer in her position at the time she signed the return could be expected to know that the return contained the * * * understatement.’ Price v. Commissioner, 887 F.2d 959, 965 (9th Cir. 1989). A taxpayer has reason to know of an understatement if she had a duty to inquire and failed to satisfy that duty. Id. A joint tax return reporting a large deduction that significantly reduces a couple’s tax liability generally puts both spouses on notice that the return may contain an understatement. See Levin v. Commissioner, T.C. Memo. 1987-67.” 2013 T. C. Sum. Op. 34, at p. 17.

Debbie was participating in the lawsuit about the basement, and the big deductions Harry claimed but later conceded were big enough for Debbie to question. And Debbie never testified she didn’t know about the bogus deductions.

“A spouse cannot obtain relief under section 6015 in a case involving disallowed deductions ‘by simply turning a blind eye to–by preferring not to know of–facts fully disclosed on a return, of such a large nature as would reasonably put such spouse on notice that further inquiry would need to be made’.” 2013 T.C. Sum. Op. 34, at p. 18 (Citation omitted).

Debbie, you’re stuck.

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